The Economic Impact of AAMC-member Medical Schools - AAMC's ...

The Economic Impact 

of AAMC-Member 

Medical Schools and 

Teaching Hospitals 

2012 

Conducted for the AAMC by Tripp Umbach 

December 2012 

Association of 

American Medical Colleges

For additional information about this publication, please contact: 

Jennifer Gold 

jgold@aamc.org 

Association of American Medical Colleges 

2450 N Street, NW 

Washington, DC 20037-1134 

©2012 Association of American Medical Colleges. 

This is a publication of the Association of American Medical Colleges. The AAMC serves and leads the 

academic medicine community to improve the health of all. www.aamc.org.

The Economic Impact of AAMC-Member 

Medical Schools and Teaching Hospitals 

2012 

Table of Contents 

Executive Summary 1 

Introduction 3 

Goals of the Economic Impact Study of AAMC Members 3 

Methodology Employed in the Economic Impact Study 3 

Economic Impact Findings: Total Impact of AAMC Members, 2011 7 

Business Volume Impact 7 

The Direct and Indirect Expansion of the Nation’s Economy Attributable to AAMC Members 7 

Total Business Volume Impact 7 

Direct Spending for Capital Improvements, Goods, Supplies, and Services 9 

Direct Spending by Staff Employed by AAMC Members 10 

Direct Spending by AAMC-Employed and Contract Physicians and Faculty 11 

Direct Spending by Residents, Medical, and Health Sciences Students 12 

Direct Spending, Outside of the Medical Schools and Teaching Hospitals, 

by Patients from Out of State 13 

Direct Spending by Out-of-State Patient Visitors 14 

Direct Spending by Conference and Meeting Visitors and Visitors to Staff, Employed Physicians, 

Residents, and Students 15 

Additional Business Impacts Allocable to AAMC Members 16 

Impact on State Government Revenues 17 

Revenues to the States Attributable to AAMC Members 17 

Total State Government Revenue 17 

Income Taxes Paid by Medical School and Hospital Staff, Employed Physicians, 

Independent Contractor Physicians, and Medical Residents 18 

Sales Tax Revenues Received by the States 19 

Corporate Net Income Tax Received by the States 20 

Other Selective Business Taxes Received by the States 21 

Impact on Employment 22 

The Direct and Indirect Expansion of Employment Attributable to AAMC Members 22 

Appendix A: Definition of Terms 23 

Appendix B: Data Sources and Assumptions* 24 

Appendix C: Publicly Funded Research Tables 27 

Appendix D: Impact of AAMC-Member Research 28 

Economic Impact of Publicly Funded Research 28 

The Expansion of Research Employment Attributable to AAMC Members 29 

Just the Tip of the Iceberg 29 

Economic Impact of Medical Advances and Health Care Cost-Savings 30 

Cancer Research Leads to Increased Longevity and Medical Cost Savings 31 

Personalized Medical Advances 31 

Advances in Treating Cardiovascular Disease as a Result of Research Saves Lives 32 

AAMC Members’ Total Research Employment Impact in FTEs, 2009 33 

Association of American Medical Colleges



2012 

Executive Summary 

In March 2012, the AAMC (Association of American Medical Colleges) retained Tripp Umbach 

to measure the economic impact 1 of AAMC-member institutions on the 46 individual states and 

the District of Columbia 2 in which they are located, as well as the nation as a whole. This report 

presents results of the combined economic impact that AAMC members have on states, and the 

country as a whole. Tripp Umbach has conducted this research for the AAMC since 1995, with five 

economic impact studies completed to date. 

During 2011, the combined economic impact of AAMC members totaled more than $587 billion. 3 

AAMC members accounted for nearly 3.5 million full-time jobs, meaning that one in every 40 

wage earners in the U.S. labor force works either directly or indirectly for an AAMC-member 

institution. This is an increase in economic impact of nearly 15 percent from 2009. Health care 

continues to be a positive sector in national employment. Despite the national unemployment 

levels remaining relatively high in the last few years because of the recession, health care has 

been an industry segment that has continued to grow and add jobs through the last few years 

and is expected to rise by employing an additional 340,000 during the current year. Additionally, 

AAMC-member institutions generated more than $34 billion in total state tax revenue through 

income taxes and sales tax, corporate net income tax, and capital stock/franchise taxes produced by 

businesses that receive revenue from AAMC members. 

AAMC-member organizations have substantial economic and social impacts on their multicounty 

regions and within the counties and cities where they have operations. Substantial local 

and regional tax impacts, while beyond the scope of this study, are estimated to be in the billions. 

Communities in all regions of the country typically rely on these organizations for job creation, 

high-quality medical care, advanced research, new business development, and education of medical 

professionals. 

Table 1 presents total national impacts, as well as individual state totals for economic, employment, 

government revenue, and out-of-state medical visitor impacts for each of 24 states and the District 

of Columbia in which AAMC members’ total economic impact is highest. 

1 For the purposes of this report, “economic impact” includes both the direct and indirect business volume generated 

by an institution. Direct impact includes items such as institutional spending, employee spending, and spending by 

visitors. The indirect impact, also known as the multiplier effect, results from the re-spending of dollars generated 

directly by the institution. 

1 

2 Although the AAMC does have member medical schools in Puerto Rico, those schools were not included in this 

research. 

3 This study measures the impact of AAMC-member institutions only. The total number of medical schools included 

in this study is 133; and the total number of teaching hospitals is 255. There are medical schools (osteopathic) and 

teaching hospitals in the United States that are not members of the AAMC; therefore, the total impact of all medical 

schools and teaching hospitals on the nation is higher than the impact presented in this report. 




2012 

Table 1 

Summary of Economic, Employment, and Government Revenue Impact For AAMC Members, 2011 

States Rank Total Economic 

Impact 

Total Employment 


Total Government 

Revenue Impact 

New York 1 $74,151,538,606 430,743 $4,819,032,979 

California 2 $49,201,512,761 264,046 $2,921,073,540 

Pennsylvania 3 $47,033,121,373 272,640 $2,882,702,406 

Massachusetts 4 $38,760,110,682 195,154 $2,234,308,702 

Texas 5 $35,825,649,773 228,513 $1,327,689,312 

Ohio 6 $32,314,079,590 209,047 $1,884,550,734 

Illinois 7 $28,732,944,479 155,233 $1,478,370,705 

Florida 8 $24,490,233,642 166,676 $1,211,629,554 

Michigan 9 $23,051,327,122 133,120 $1,585,794,455 

North Carolina 10 $17,330,838,088 120,578 $942,220,251 

New Jersey 11 $15,413,836,889 94,961 $1,001,558,411 

Maryland 12 $14,611,835,125 81,944 $861,726,043 

Missouri 13 $12,442,654,552 78,390 $605,050,899 

Georgia 14 $12,359,469,277 83,483 $554,084,789 

Tennessee 15 $11,959,611,610 74,553 $543,903,310 

Connecticut 16 $11,768,111,887 65,915 $724,790,589 

Minnesota 17 $10,276,917,979 65,208 $734,519,205 

Virginia 18 $9,794,616,363 63,145 $441,567,020 

Arizona 19 $9,783,041,405 51,897 $489,246,458 

Wisconsin 20 $9,619,603,739 44,244 $639,287,761 

Indiana 21 $9,030,962,138 55,456 $569,725,984 

South Carolina 22 $8,251,462,603 38,242 $448,599,521 

Louisiana 23 $7,593,762,705 42,602 $383,823,662 

District of Columbia 24 $7,320,921,118 49,290 $1,041,793,206 

Washington 25 $5,745,608,783 34,474 $309,279,038 

All Other States $60,429,232,449 389,881 $3,666,397,182 

U.S. Total $587,293,004,740 3,489,435 $34,302,725,713 

Note: Tables include the 24 individual states and the District of Columbia in which AAMC members’ impact is highest, 

plus an “all other states” total, which reflects the impact of the remaining 22 states where AAMC members are located. 

2 

Compared with the last study, which was completed in 2009, it is interesting to note that 24 of the 

25 states in Table 1 remain unchanged. The top 25 individual states remain, with the exception 

of Alabama, which has been replaced by Washington, at number 25. Also, some states, such as 

California, Florida, Connecticut, Arizona, and Louisiana have moved up in the list, while others 

have moved back. 




2012 

Introduction 

Goals of the Economic Impact Study of AAMC Members 

In 1995, the AAMC identified a need to provide benchmark data to continue to assess the status 

of its members’ current economic impact on states’ economies, employment, and government 

revenue. Specifically, Tripp Umbach was commissioned to perform research that: 

• Measures the direct economic impact on individual states’ and the nation’s economy as a 

result of the education, research, and clinical services of AAMC-member medical schools and 

teaching hospitals. 

• Measures the direct and indirect employment generated in the United States as a result of 

AAMC-member medical schools and teaching hospitals. 

• Measures government revenues that are generated by the presence and operations of AAMCmember 

medical schools and teaching hospitals. (Medical schools and hospitals that are public 

and not-for-profit indirectly generate government revenue through income taxes paid by staff, 

employed physicians, and medical residents; sales tax revenues paid by businesses providing 

goods and services to medical schools and hospitals; corporate net income taxes paid by 

businesses providing goods and services to medical schools and hospitals; and other selective 

business taxes such as gross receipts taxes, public utility realty taxes, insurance premium taxes, 

motor vehicle taxes, and financial institutions taxes.) 

• Measures the economic impact of publicly funded research, which has a significant effect on 

the state and local economy. In 2009, this impact was $44.9 billion. 4 

Methodology Employed in the Economic Impact Study 

This report analyzes AAMC-member impact on the national economy. AAMC members employ 

individuals in their home states, and therefore, generate personal income for state residents. 

Businesses operating within each state in the wholesale, retail, service, and manufacturing sectors 

benefit from the direct expenditures of AAMC-member institutions and their staff on goods 

and services. In addition, businesses in each state are recipients of spending by hospital patients, 

patients’ visitors, medical students, and their visitors. 

All of these “direct” expenditures are recirculated in the economy, as recipients of the first-round of 

income “re-spend” a portion of this income with other businesses and individuals within each state. 

This re-spending is often termed the “multiplier” or “indirect” effect. Tripp Umbach’s research has 

determined a medical school/teaching hospital business volume multiplier effect of 2.3. Therefore, 

for every dollar directly spent by a medical school or teaching hospital, an additional $1.30 is 

indirectly generated for a total impact of $2.30. The methodology used for this study measures the 

effect of both direct and indirect business volume, employment, and government revenue impacts 

for states containing an AAMC member. 

3 

4 “Economic Impact of Public Research Funding Received by AAMC Member Institutions,” conducted for the AAMC 

by Tripp Umbach, 2010. 




2012 

Not included in Tripp Umbach’s impact model is patient spending at the hospital itself, or 

economic benefits that result from AAMC members’ provision of community health improvement 

activities, preventive and primary care, access to care, and physician training. Additionally, this 

study does not include the impact generated by the existence of non-employed physicians with 

privileges at AAMC-member institutions. 

The Tripp Umbach methodology generally employed in these studies was originally derived from 

a set of research tools and techniques developed for the American Council on Education (ACE). 5 

The ACE-based methodology employs linear cash flow modeling to track the flow of institutionoriginated 

funds through a delineated spatial area. Tripp Umbach modified the ACE model to 

accommodate the complexities of AAMC-member organizations (see Figure 1). 

4 

5 Caffrey, John and Isaacs, Herbert, Estimating the Impact of a College or University on the Local Economy, American 

Council on Education, 1971. 




2012 

Figure 1 

AAMC-Member Economic Impact Model 

AAMC-member organization 

Direct spending by 

member for capital 

improvements and 

goods and services 

In-state spending 

by staff, MDs, 

students, and 

residents 

In-state out-ofhospital 

spending 

by out-of-state 

patients 

In-state spending 

by out-of-state 

visitors 

In-state out-ofmedical 

school 

spending by 

students 

Direct 

Employment 

Multiplier 

Effect 

Income tax payments 

by staff, MDs, and 

residents 

Indirect Business 

Tax Payments 

Indirect 

Employment 

Indirect Business 

Spending 

Total Tax 


Total Employment 


Total Business 

Volume Impact 

5 




2012 

To complete the economic impact model outlined above, Tripp Umbach researchers worked closely 

with representatives from the AAMC to collect the required data. The following data were used to 

perform this research: 

1. Academic Medical Center Data 

The AAMC maintains a number of databases of information necessary for the performance of the 

impact research. These databases were utilized to supply the following information: 

• Capital budget (hospital only) • FTE faculty 

• Payroll expenditures (hospital only) • Outpatient visits 

• FTE staff (hospital only) • Inpatient admissions 

• FTE physician employees • Medical students 

• FTE residents and interns • Research grants and contracts 

• FTE contract physicians • Clinical fellows 

• Faculty payroll 

For data needed for the impact study, but not supplied by the AAMC, Tripp Umbach used 

extrapolations derived from recently performed Tripp Umbach impact studies. Tripp Umbach has 

found that such extrapolation-based models provide an acceptably accurate measure of economic 

impact. 6 For some sources, the most recent data represented 2010 information rather than 2011 

information. To help ensure the comparability of information, the 2010 data were aged by one year, 

assuming a 3 percent growth rate for inflation. 

2. Tripp Umbach Impact Study Data 

Using secondary research and the company’s national database of medical school and teaching 

hospital information (constructed from medical schools and teaching hospitals that have completed 

individual economic impact studies with Tripp Umbach 7 ), Tripp Umbach supplied additional 

data to supplement those supplied by the AAMC. Data provided by Tripp Umbach included the 

following: 

• Capital budget (medical schools only) • Employee spending 

• Goods and services spending • Physician spending 

• Payroll expenditures (medical schools only) • Government revenue data 

• FTE staff (medical schools only) • Business multiplier 

• Visitor spending • Employment multiplier 

6 

6 In the Pennsylvania Medical Centers of Excellence study cited in this report, models were built for more than 25 

individual teaching hospitals. Two hospitals supplied data late for the study and extrapolation-based models were built. 

When the hospitals’ actual completed data forms arrived, the data were entered into the model and the overall results 

obtained by the extrapolations were found to be within +/-5 percent of actual. 

7 Tripp Umbach has completed more than 100 economic impact studies for various medical schools and teaching 

hospitals over the last 20 years; more than 20 of these studies were conducted within the last two years. 




2012 

Economic Impact Findings: 

Total Impact of AAMC Members, 2011 

Business Volume Impact 

The Direct and Indirect Expansion of the Nation’s Economy Attributable to AAMC Members 

Direct economic impact stems from the spending of AAMC medical school and teaching hospital 

members. These impacts fall within seven principal groups: institutional expenditures for capital 

improvements, goods, and services; spending of employees; spending of independent contractor 

physicians; spending of medical residents; spending of medical and other health sciences students; 

spending of patients (external to the hospital); and spending of visitors. In addition, these direct, 

first-round expenditures, received as income by businesses and individuals in the state, recirculate 

through the economy in successive rounds of re-spending. The end result is a multiplied economic 

impact that is a linear result of AAMC members’ presence and their spending patterns. 

The results of this analysis include: 

Total Business Volume Impact 

In 2011, AAMC medical school and teaching hospital members had a combined total 

economic impact on the United States of $587,293,004,740. This economic impact comprised 

$255,344,784,670 in direct business volume impact, and a further $331,948,220,070 in indirect 

economic impacts accruing to the economy through the multiplier. 

Table 2 lists the business volume impact (economic impact) for the country and each of the 24 

states and the District of Columbia in which AAMC members’ total economic impact is highest. 

7 




2012 

Table 2 

Total State Business Volume Impact of AAMC-Member Institutions, 2011 



Direct Economic 


Indirect Economic 


New York 1 $74,151,538,606 $32,239,799,394 $41,911,739,212 

California 2 $49,201,512,761 $21,391,962,070 $27,809,550,691 

Pennsylvania 3 $47,033,121,373 $20,449,183,206 $26,583,938,168 

Massachusetts 4 $38,760,110,682 $16,852,222,036 $21,907,888,646 

Texas 5 $35,825,649,773 $15,576,369,466 $20,249,280,306 

Ohio 6 $32,314,079,590 $14,049,599,822 $18,264,479,768 

Illinois 7 $28,732,944,479 $12,492,584,556 $16,240,359,923 

Florida 8 $24,490,233,642 $10,647,927,670 $13,842,305,971 

Michigan 9 $23,051,327,122 $10,022,316,140 $13,029,010,982 

North Carolina 10 $17,330,838,088 $7,535,146,995 $9,795,691,093 

New Jersey 11 $15,413,836,889 $6,701,668,213 $8,712,168,676 

Maryland 12 $14,611,835,125 $6,352,971,794 $8,258,863,332 

Missouri 13 $12,442,654,552 $5,409,849,805 $7,032,804,747 

Georgia 14 $12,359,469,277 $5,373,682,295 $6,985,786,983 

Tennessee 15 $11,959,611,610 $5,199,831,135 $6,759,780,475 

Connecticut 16 $11,768,111,887 $5,116,570,386 $6,651,541,502 

Minnesota 17 $10,276,917,979 $4,468,225,208 $5,808,692,771 

Virginia 18 $9,794,616,363 $4,258,528,853 $5,536,087,510 

Arizona 19 $9,783,041,405 $4,253,496,263 $5,529,545,142 

Wisconsin 20 $9,619,603,739 $4,182,436,408 $5,437,167,331 

Indiana 21 $9,030,962,138 $3,926,505,277 $5,104,456,861 

South Carolina 22 $8,251,462,603 $3,587,592,436 $4,663,870,167 

Lousiana 23 $7,593,762,705 $3,301,635,959 $4,292,126,746 

District of Columbia 24 $7,320,921,118 $3,183,009,182 $4,137,911,936 

Washington 25 $5,745,608,783 $2,498,090,775 $3,247,518,008 

All others $5,330,993,496 $2,317,823,259 $3,013,170,237 

U.S. Total $587,293,004,740 $255,344,784,670 $331,948,220,070 



8 




2012 

The direct impact comprised the 

following impact components: 

Direct spending for capital 

improvements, goods, supplies, 

and services 

This category of impact includes 

the spending by AAMC members 

for improvements to their facilities 

and capital equipment purchases. 

In addition, the category includes 

the purchase of goods, services, and 

supplies. These may include a broad 

range of purchases such as laundry 

services, food and beverage supplies, 

drugs, medical disposables, computer 

consulting, etc. AAMC medical school 

and teaching hospital members’ 

spending for capital improvements, 

goods, supplies, and services totaled 

$156,641,725,585 in 2011. 

Table 3 lists the top 24 state and 

District of Columbia totals. 

Table 3 

AAMC Members’ State Spending for Capital 

Improvements, Goods, Supplies, and Services 2011 

States Rank Direct Spending for Capital 

Improvements 

New York 1 $18,611,084,621 

California 2 $13,467,801,741 

Pennsylvania 3 $13,411,412,738 

Massachusetts 4 $10,294,962,931 

Texas 5 $9,778,233,811 

Ohio 6 $8,577,873,046 

Illinois 7 $7,744,330,977 

Florida 8 $6,619,119,559 

Michigan 9 $6,358,864,160 

North Carolina 10 $4,667,185,021 

Maryland 11 $3,944,179,636 

New Jersey 12 $3,775,995,940 

Georgia 13 $3,415,362,687 

Missouri 14 $3,308,107,757 

Tennessee 15 $3,172,892,025 

Connecticut 16 $2,975,887,449 

Wisconsin 17 $2,822,783,234 

Arizona 18 $2,807,001,095 

South Carolina 19 $2,478,130,338 

Indiana 20 $2,454,010,610 

Virginia 21 $2,426,643,263 

Minnesota 22 $2,371,621,869 

Louisiana 23 $2,233,180,064 

District of Columbia 24 $1,713,902,194 

Alabama 25 $1,548,272,759 

All Other States $15,662,886,064 

U.S. Total $156,641,725,585 

Note: Tables include the 24 individual states and the District of Columbia 

in which AAMC members’ impact is highest, plus an “all other states” 

total, which reflects the impact of the remaining 22 states where AAMC 

members are located. 

9 




2012 

Direct spending by staff 

employed by AAMC members 8 

While AAMC members spend a 

substantial amount of money on 

goods and services, one of their 

biggest benefits to the economy is 

their direct payroll. AAMC medical 

school and teaching hospital members 

have a combined payroll and benefits 

obligation to staff (administrators, 

nurses, aides, etc.) that generates 

significant direct and indirect impacts 

through staff spending. Spending by 

staff employed by AAMC members 

totaled $56,762,384,680. 


District of Columbia totals for staff 

spending. 

Table 4 

AAMC Members’ Staff Spending, 2011 

States Rank Direct Spending by Staff 

New York 1 $8,258,610,762 

California 2 $4,929,363,936 

Pennsylvania 3 $3,995,749,550 

Texas 4 $3,554,344,540 


Ohio 6 $2,968,079,985 

Illinois 7 $2,805,623,010 

Florida 8 $2,584,790,921 

Michigan 9 $2,127,962,490 

New Jersey 10 $1,952,415,978 

North Carolina 11 $1,677,476,251 

Connecticut 12 $1,398,806,221 

Missouri 13 $1,162,049,835 

Georgia 14 $1,145,736,017 

Maryland 15 $1,136,046,186 

Minnesota 16 $1,077,550,512 

Virginia 17 $1,016,135,350 

Tennessee 18 $977,664,145 

Arizona 19 $940,039,405 

Indiana 20 $885,886,966 

District of Columbia 21 $790,291,424 

Wisconsin 22 $733,248,502 

Washington 23 $592,351,708 

Louisiana 24 $590,364,962 

South Carolina 25 $588,491,681 


U.S. Total $56,762,384,680 





10 

8 For the purposes of this report, “staff” does not include physicians or faculty employed by AAMC members. 




2012 

Direct spending by AAMCemployed 

and contract 

physicians and faculty 

As with payroll to general staff, the 

pay provided to physicians directly 

employed by or contracted with 

AAMC members has a substantial 

positive impact on the economy 

through physician spending. 

Adjustments were made to include 

only the impact of income received 

by employed and contract physicians 

as a result of the services provided at 

AAMC-member hospitals. Spending 

by AAMC-employed and contract 

physicians totaled $19,558,429,338. 


District of Columbia totals for 

physician and faculty spending. 

Table 5 

AAMC Members’ Physician (Employed and Contract) and 

Faculty Spending, 2011 

States Rank Direct Spending by 

Physicians/Faculty 

New York 1 $2,532,402,729 



California 4 $1,318,027,150 

Ohio 5 $1,193,981,802 

Texas 6 $927,048,899 

Illinois 7 $819,098,314 

Maryland 8 $763,882,659 

Michigan 9 $670,931,456 

Minnesota 10 $624,259,616 

Tennessee 11 $541,271,799 

Florida 12 $517,707,519 

North Carolina 13 $458,175,148 

Missouri 14 $401,318,581 

Virginia 15 $371,813,746 


New Jersey 17 $333,211,943 

Wisconsin 18 $327,541,775 

Georgia 19 $323,290,015 

Washington 20 $276,876,885 

Oregon 21 $276,331,545 

Connecticut 22 $270,249,402 

Colorado 23 $263,522,362 


Indiana 25 $230,324,234 


U.S. Total $19,558,429,338 





11 




2012 

Direct spending by residents, 

medical, and health sciences 

students 

As institutions of excellence in 

research, medical, and health sciences 

education, AAMC members attract 

students from inside and outside the 

United States to study at their schools 

and hospitals. Spending by residents 

and students for housing, food, 

supplies, entertainment, and other 

items and services comprise their 

direct impact on the nation’s economy. 

Only resident and student spending 

that is made off campus is included 

in the impact calculations. Spending 

by residents and students totaled 

$4,742,208,916. 


District of Columbia totals for 

resident/student spending. 

Table 6 

AAMC Members’ Resident and Student Spending, 2011 

States Rank Direct Spending by 

Resident/Student 

New York 1 $712,307,897 

California 2 $375,317,087 

Pennsylvania 3 $347,421,101 

Illinois 4 $271,516,702 

Massachusetts 5 $257,881,954 

Ohio 6 $249,035,276 

Texas 7 $178,708,836 


Michigan 9 $168,719,500 

Missouri 10 $138,449,557 

Florida 11 $128,997,165 

Connecticut 12 $127,786,780 

New Jersey 13 $127,401,385 

Virginia 14 $112,525,891 

Tennessee 15 $109,988,676 

Georgia 16 $88,376,216 

Maryland 17 $86,864,900 



Indiana 20 $68,896,171 

Wisconsin 21 $64,230,421 

Kentucky 22 $61,801,308 

Rhode Island 23 $60,378,050 

Louisiana 24 $59,984,951 

Minnesota 25 $58,420,993 

All Other States $560,462,317 

U.S. Total $4,742,208,916 





12 




2012 

Direct spending, outside of the 

medical schools and teaching 

hospitals, by patients from out 

of state 

Spending by patients for medical 

services is not included in the 

direct impact. Only the spending 

of these patients (both inpatients 

and outpatients) outside of AAMC 

members is included. Spending 

outside of AAMC-member 

institutions by patients totaled 

$1,388,774,251. 


District of Columbia totals for out-ofstate 

patient spending. 

Table 7 

AAMC Members’ Out-of-State Patient Spending, 2011 

States Rank Out-of-State Patient 

Spending 

New York 1 $142,722,420 

California 2 $108,330,759 

Texas 3 $98,249,812 


Ohio 5 $96,115,252 

Illinois 6 $91,714,600 

Michigan 7 $78,226,235 


New Jersey 9 $53,488,463 

Louisiana 10 $42,962,453 

Florida 11 $38,412,820 


Indiana 13 $33,256,896 

Missouri 14 $32,050,287 

Tennessee 15 $29,664,389 

Virginia 16 $28,629,268 

Connecticut 17 $28,231,608 

Minnesota 18 $22,091,957 

Maryland 19 $20,275,777 

Georgia 20 $20,173,808 

Wisconsin 21 $20,088,197 

Arizona 22 $19,739,992 


Washington 24 $14,771,970 



U.S. Total $1,388,774,251 





13 




2012 

Direct spending by out of state 

patient visitors 

As any person working at a 

hospital could confirm, medical 

centers and teaching hospitals are 

substantial visitor destinations. 

Visitors come to see patients who are 

friends and family, and they create 

spending in the economy through 

accommodations, gifts, services, and 

other items. Spending by out-of-state 

patient visitors totaled $1,795,954,871. 


District of Columbia totals for patient 

visitor spending. 

Table 8 

AAMC Members’ Patient Visitor Spending, 2011 

States Rank Patient Visitor Spending 

New York 1 $217,205,852 


California 3 $112,145,524 

Ohio 4 $103,842,493 

Texas 5 $101,176,383 

Florida 6 $99,387,717 

Illinois 7 $98,917,016 


New Jersey 9 $77,108,327 

Michigan 10 $72,637,980 


Tennessee 12 $48,609,209 


Maryland 14 $44,624,655 

Arizona 15 $43,089,426 

Missouri 16 $39,653,664 

Georgia 17 $39,398,072 

Minnesota 18 $38,903,656 

Virginia 19 $33,777,202 

Louisiana 20 $32,515,291 

Indiana 21 $29,289,129 


Wisconsin 23 $24,349,279 


Rhode Island 25 $15,650,524 


U.S. Total $1,795,954,871 





14 




2012 

Direct spending by conference 

and meeting visitors and visitors 

to staff, employed physicians, 

residents, and students 

AAMC members are major 

sponsors of meetings, seminars, 

and symposiums in the state. These 

events draw significant numbers of 

delegates, who, like delegates to other 

conferences and trade shows, provide 

a major boost to the economy through 

their fresh influx of dollars. In 

addition to the conference delegates, 

the hospital physicians, employees, 

and students also attract substantial 

numbers of visitors. Spending by all of 

these visitors totaled $14,477,178,148. 

Table 9 details the top 24 state and 

District of Columbia totals for AAMC 

members’ conference and meeting 

visitors and visitors to staff, employed 

physicians, residents, and students. 

Table 9 

Spending by Visitors to AAMC Members’ Conferences, 

Staff, Physicians, Residents, and Students, 2011 

States Rank Spending by Visitors to 

Conference 

New York 1 $1,765,465,112 


California 3 $1,080,975,874 

Texas 4 $938,607,186 

Ohio 5 $860,671,969 


Illinois 7 $661,383,938 

Florida 8 $659,511,970 

Michigan 9 $544,974,318 


New Jersey 11 $382,046,177 

Maryland 12 $357,097,980 

Georgia 13 $341,345,479 

Missouri 14 $328,220,124 

Tennessee 15 $319,740,893 

Minnesota 16 $275,376,606 

Virginia 17 $269,004,133 

Connecticut 18 $263,444,903 

Indiana 19 $224,841,272 


Arizona 21 $206,327,803 

Wisconsin 22 $190,195,000 

Louisiana 23 $186,091,411 


Washington 25 $150,090,729 


U.S. Total $14,477,178,148 





15 




2012 

Additional business impacts allocable to AAMC members 

In addition to the annual, recurring impacts of the spending categories outlined above, businesses 

in the country have invested heavily to support the business volume generated by AAMC members. 

The Tripp Umbach impact model calculates the two principal components of business investments: 

business real property development and business inventories committed to academic medical centerrelated 

business. Table 10 includes the top 24 state and District of Columbia totals for AAMC members’ 

real property investments and business inventories. 

Table 10 

AAMC Members’ Business Real Property Investments and Business Inventories, 2011 

16 

States Rank Business Real Property Investments Business Inventories 

New York 1 $10,974,427,714 $9,194,790,787 

California 2 $7,281,823,889 $6,100,987,582 

Pennsylvania 3 $6,960,901,963 $5,832,107,050 

Massachusetts 4 $5,736,496,381 $4,806,253,725 

Texas 5 $5,302,196,166 $4,442,380,572 

Ohio 6 $4,782,483,779 $4,006,945,869 

Illinois 7 $4,252,475,783 $3,562,885,115 

Florida 8 $3,624,554,579 $3,036,788,972 

Michigan 9 $3,411,596,414 $2,858,364,563 

North Carolina 10 $2,564,964,037 $2,149,023,923 

New Jersey 11 $2,281,247,860 $1,911,315,774 

Maryland 12 $2,162,551,599 $1,811,867,556 

Missouri 13 $1,841,512,874 $1,542,889,165 

Georgia 14 $1,829,201,453 $1,532,574,190 

Tennessee 15 $1,770,022,518 $1,482,991,840 

Connecticut 16 $1,741,680,559 $1,459,245,874 

Minnesota 17 $1,520,983,861 $1,274,337,829 

Virginia 18 $1,449,603,222 $1,214,532,429 

Arizona 19 $1,447,890,128 $1,213,097,134 

Wisconsin 20 $1,423,701,353 $1,192,830,864 

Indiana 21 $1,336,582,396 $1,119,839,305 

South Carolina 22 $1,221,216,465 $1,023,181,363 

Louisiana 23 $1,123,876,880 $941,626,575 

District of Columbia 24 $1,083,496,326 $907,794,219 

Washington 25 $850,350,100 $712,455,489 

All Other States $8,943,526,402 $7,493,224,824 

U.S. Total $86,919,364,702 $72,824,332,588 






2012 

Impact on State Government 

Revenues 

Revenues to the states attributable 

to AAMC members 

A major misconception held by 

business leaders, elected officials, 

and the general public is that medical 

schools and teaching hospitals do 

not generate government revenue. 

While AAMC members are generally 

not-for-profit institutions, state 

governments receive substantial 

revenues as a result of both the 

direct and indirect influence of 

these medical schools and teaching 

hospitals. AAMC medical school and 

teaching hospital members provide 

significant revenue in state income 

taxes. In addition, the substantial 

spending with state business generates 

large-scale revenues for each state 

in the form of sales tax, corporate 

net income tax, and capital stock/ 

franchise taxes. The Tripp Umbach 

model calculated the revenue benefits 

accruing to the state from these 

sources. The results of this analysis 

follow. 

Total state government revenue 

AAMC medical school and teaching 

hospital members generated a total 

of $34,302,725,713 in revenues for 

state governments in 2011. Table 11 

includes the top 24 state and District 

of Columbia totals for AAMCmember 

government revenue. 

Table 11 

AAMC Members’ Government Revenue Impact, 2011 

States Rank Total Government Revenue 


New York 1 $4,819,032,979 

California 2 $2,921,073,540 



Ohio 5 $1,884,550,734 

Michigan 6 $1,585,794,455 

Illinois 7 $1,478,370,705 

Texas 8 $1,327,689,312 

Florida 9 $1,211,629,554 

District of Columbia 10 $1,041,793,206 

New Jersey 11 $1,001,558,411 


Maryland 13 $861,726,043 

Minnesota 14 $734,519,205 

Connecticut 15 $724,790,589 

Wisconsin 16 $639,287,761 

Missouri 17 $605,050,899 

Indiana 18 $569,725,984 

Georgia 19 $554,084,789 

Tennessee 20 $543,903,310 

Arizona 21 $489,246,458 


Virginia 23 $441,567,020 

Louisiana 24 $383,823,662 

Kentucky 25 $335,764,584 


U.S. Total $34,302,725,713 





17 




2012 

These revenues comprise the 

following: 

Income taxes paid by 

medical school and hospital 

staff, employed physicians, 

independent contractor 

physicians, and medical 

residents 

The state income tax payments of 

personnel employed by the medical 

centers and teaching hospitals and the 

independent contractor physicians 

(on the portion of their income 

attributable to AAMC members) 

generates substantial revenue for each 

state. Income tax revenues totaled 

$12,578,369,120. 

Table 12 includes the top 24 state 

and District of Columbia totals for 

AAMC-member income taxes. 

Table 12 

Individual Income Tax Revenues Generated by AAMC 

Members’ Employees, 2011 

States Rank Individual Income Tax 

Revenue Generated 

New York 1 $2,741,554,555 

California 2 $1,282,747,031 



Ohio 5 $654,937,054 

Illinois 6 $464,344,767 


Michigan 8 $408,106,052 

New Jersey 9 $392,859,097 

Maryland 10 $365,211,631 

Connecticut 11 $334,336,683 

Minnesota 12 $297,385,812 

Missouri 13 $280,234,953 

Georgia 14 $268,847,613 


Wisconsin 16 $264,223,412 

Virginia 17 $244,463,118 


Indiana 19 $164,927,768 

Kentucky 20 $114,279,456 

Arizona 21 $113,178,769 

Louisiana 22 $110,634,401 

Rhode Island 23 $110,165,301 

Oregon 24 $99,830,645 

Iowa 25 $98,712,697 


U.S. Total $12,578,369,120 





18 




2012 

Sales tax revenues received by 

the states 

As noted above, AAMC members 

generate substantial sales for 

businesses in the state. This 

spending also generates sales and 

other consumption tax revenue in 

the state. Sales tax revenues totaled 

$15,854,821,740. 

Table 13 shows the top 24 state and 


members’ sales and gross receipts tax 

revenues. 

Table 13 

Sales and Gross Receipts Tax Revenues Generated by 

AAMC Members’ Spending, 2011 

States Rank Sales/Gross Receipts Tax 

Revenues Generated 

New York 1 $1,506,099,306 


California 3 $1,052,126,045 

Texas 4 $1,037,085,263 

Florida 5 $1,019,387,688 

Ohio 6 $956,003,126 

Michigan 7 $871,306,185 

Illinois 8 $794,513,401 


New Jersey 10 $431,988,930 

Tennessee 11 $417,083,024 


Maryland 13 $350,817,642 

Indiana 14 $338,613,255 

Connecticut 15 $323,409,007 

Minnesota 16 $315,114,847 

Arizona 17 $294,861,823 

Wisconsin 18 $294,146,103 


Missouri 20 $270,094,856 

Washington 21 $247,135,868 

Georgia 22 $241,276,171 


Louisiana 24 $195,747,027 

Kentucky 25 $160,760,421 


U.S. Total $15,854,821,740 





19 




2012 

Corporate net income tax 

received by the states 

The business volume generated by 

AAMC members and their related 

spending is received as revenue by 

a broad range of businesses in the 

states. This revenue, in the case of 

corporations, generates corporate net 

income tax receipts for individual 

states. Corporate net income tax 

revenues totaled $1,906,714,634. 


and District of Columbia totals 

for AAMC-member corporate net 

income taxes. 

Table 14 

Corporate Net Income Tax Generated by AAMC Members’ 

Spending, 2011 

States Rank Corporate Net Income Tax 

New York 1 $329,497,999 

California 2 $275,765,967 



New Jersey 5 $88,323,343 

Illinois 6 $86,096,063 

Florida 7 $69,405,474 

Michigan 8 $49,003,377 

Tennessee 9 $42,553,570 

Maryland 10 $42,225,055 


Ohio 12 $41,024,330 


Minnesota 14 $33,344,262 

Indiana 15 $32,076,458 

Wisconsin 16 $29,066,457 


New Hampshire 18 $26,274,449 

Arizona 19 $26,020,738 

Georgia 20 $23,941,620 

Louisiana 21 $23,045,565 

West Virginia 22 $20,313,581 

Alabama 23 $17,867,549 

Virginia 24 $16,843,480 

Missouri 25 $16,365,777 


U.S. Total $1,906,714,634 





20 




2012 

Other selective business taxes 

received by the states 

A number of other taxes apply 

to various business enterprises 

around the country. These include 

gross receipts tax, public utility 

realty tax, insurance premiums tax, 

motor vehicle tax, and the financial 

institutions tax. Revenues from these 

taxes totaled $3,962,820,218. 


and District of Columbia totals for 

AAMC-member spending on other 

selective business taxes received by 

the states. 

Table 15 

Other Tax Revenue Generated by AAMC Members, 2011 

States Rank Other Tax Revenues 

New York 1 $241,881,116 

California 2 $310,434,496 



New Jersey 5 $88,387,039 

Illinois 6 $133,416,473 

Florida 7 $122,836,391 

Michigan 8 $257,378,839 

Tennessee 9 $72,709,765 

Maryland 10 $103,471,713 


Ohio 12 $232,586,222 


Minnesota 14 $88,674,282 

Indiana 15 $34,108,501 

Wisconsin 16 $51,851,787 


New Hampshire 18 $37,510,676 

Arizona 19 $55,185,126 

Georgia 20 $20,019,384 

Louisiana 21 $54,396,668 

West Virginia 22 $28,166,285 

Alabama 23 $34,233,561 

Virginia 24 $30,345,677 

Missouri 25 $38,355,311 


U.S. Total $3,962,820,218 





21 




2012 

22 

Impact on Employment 

The direct and indirect expansion of 

employment attributable to AAMC 

members 

Perhaps the benefit that comes closest 

to home is the sheer number of United 

States citizens who depend on AAMC 

members, either directly or indirectly, 

for their jobs and livelihoods. A total 

of 3,489,435 jobs in the United States 

in 2011 were directly or indirectly 

attributable to AAMC members. 

Even on a direct employment basis 

(i.e., only counting those directly paid 

by AAMC members such as regular 

staff, faculty, independent contractors, 

or residents receiving training), 

AAMC members are responsible for 

a substantial component of national 

employment. During 2011, AAMC 

members employed a total of 1,938,575 

full-time equivalent (FTE) people. This 

includes staff, physician employees, 

and independent physician contractors. 

It also includes residents who are paid 

a stipend while they continue their 

graduate medical education. 

While direct employment is significant, 

the actual extent of employment 

impact on the state stemming from 

AAMC members is considerably 

larger. The business volume generated 

by AAMC members creates jobs in 

a broad range of sectors throughout 

the nation’s economy. These jobs are 

proportionate to the need to service 

the AAMC members themselves 

and their related populations 

(staff, physicians, students, etc.). In 

addition, the tax revenues generated 

at the state and local levels by AAMC 

members and their business volume 

also create government employment 

opportunities. 

Table 16 includes the top 24 state and 


employment impact. 

Table 16 

AAMC Members’ Total Employment Impact in FTEs, 2011 

States Rank Total Employment Impact 

New York 1 430,743 

Pennsylvania 2 272,640 

California 3 264,046 

Texas 4 228,513 

Ohio 5 209,047 

Massachusetts 6 195,154 

Florida 7 166,676 

Illinois 8 155,233 

Michigan 9 133,120 

North Carolina 10 120,578 

New Jersey 11 94,961 

Georgia 12 83,483 

Maryland 13 81,944 

Missouri 14 78,390 

Tennessee 15 74,553 

Connecticut 16 65,915 

Minnesota 17 65,208 

Virginia 18 63,145 

Indiana 19 55,456 

Arizona 20 51,897 

District of Columbia 21 49,290 

Wisconsin 22 44,244 

Louisiana 23 42,602 

South Carolina 24 38,242 

Washington 25 34,474 

All Other States 389,881 

U.S. Total 3,489,435 








2012 

Appendix A: Definition of Terms 

Direct Employment 

Direct Tax Payments 

Indirect Employment 

Indirect Tax Payments 

Multiplier Effect 

Total Business Volume 

Total Economic Impact 

Research Commercialization 

Total employees based on full-time equivalents (FTEs) 

Direct tax payments made by an institution to a unit of government 

The additional jobs created as a result of the institution’s economic 

impact. Local companies that provide goods and services to an 

institution increase their number of employees as purchasing 

increases, creating an employment multiplier. 

Government revenue that is collected by governmental units in 

addition to those paid directly by an institution, including taxes paid 

directly by employees of the institution, visitors to the institution, 

and vendors who sell products to the institution. 

The additional economic impact created as a result of the 

institution’s direct economic impact. Local companies that provide 

goods and services to an institution increase their purchasing, 

creating a multiplier. 

Total sales receipts generated within a given geographic area. 

Business volume includes wholesale, retail, and service sector 

spending, as well as value-added in the manufacturing process. 

The total economic impact of an institution includes both the direct 

economic impact and the indirect economic impact generated in 

the economy as a result of the direct impact. Direct impact includes 

items such as institutional spending, employee spending, and 

spending by visitors to the institution. Indirect economic impact, 

also known as the multiplier effect, includes the re-spending of 

dollars within the local economy. 

Research can be commercialized in a number of ways. In all cases, 

though, it typically involves defining the nature of the research being 

commercialized, for instance, in a patent or intellectual property 

agreement, establishing a commercial relationship with another party 

such as in a sale or license, and negotiating a contract, or specifically, 

the details of compensation. 

23 




2012 

Appendix B: Data Sources and Assumptions* 

Input 

Data Source/Assumption 

Total economic impact business volume multiplier 

Capital account expenditures 

Spending on goods, services, and supplies, (noncapital 

account and non-payroll expenditures) 

Proportion of staff renting housing 

Standard state multiplier as recommended by the 

American Council on Education 

AAMC database for hospital expenditures 

Tripp Umbach national average rate for medical 

school expenditures based on the hospital and 

medical school budget 


school and hospital expenditures based on hospital 

and medical school budgets 

Tripp Umbach national average 

Percent of staff residing in the state 


Number of staff 

Average expenditure by a staff member for rental 

housing 

Proportion of the staff residing in the state 

AAMC database for hospital staffing 


school staffing 



Proportion of total non-housing expenditures that an 

individual is likely to make in the state 

Total institution-related income of staff 

Proportion of a consumer's total expenditures spent 

on non-housing items 

Proportion of the staff not residing in the state 


AAMC database for hospital expenditures 


school expenditures 



Average expenditures in the state by each staff person 

not residing in the state 

Proportion of physician employees residing in the 

state 

Proportion of physician employees renting housing 




Number of physician employees 

AAMC database 

24 

Average expenditure by a physician employee for 

rental housing 





2012 

25 

Input 

Average income of physician employee 

Average expenditures in the state by each physician employee 


Proportion of independent contractor physicians residing in 

the state 

Proportion of independent contractor physicians renting 

housing 

Number of independent contractor physicians 

Average expenditure by an independent contractor for rental 

housing 

Proportion of total non-housing expenditures that an 

individual is likely to make in the state 

Average amount paid by hospitals to hospital independent 

contractor physicians 

Average expenditures in the state by each independent 

contractor not residing in the state 

Total number of admissions/discharges 

Percent of admissions/discharges by out-of-state patients 

Total number of outpatient visits 

Percent of outpatient visits by out-of-state patients 

Average expenditures in the state, excluding expenditures at 

hospital, by out-of-state patients 

Number of out-of-state visitors per patient 

Average spending per visitor per day in state 

Average length of stay by visitor (days) 

Number of out-of-state visits to hospital by conference 

attendees 

Average number of days in state hotels and motels by 

conference attendees 

Average cost per night for a hotel/motel room in state 

Average daily expenditures by conference attendees exclusive 

of lodging 

Average number of visitors to each staff member 

Average length of stay (days) for visitors to staff 

Daily expenditures in the state by each visitor to hospital staff 

Number of enrollees (students) 

Average number of visitors per enrollee 

Average length of stay (days) for visitors to students 






Tripp Umbach national average inflation 

added to a historical AAMC datapoint 



Tripp Umbach national average inflation 

added to a historical AAMC datapoint 























2012 

Input 

Daily expenditures in the state by each visitor to students 

Total number of medical residents 

Average number of out-of-state visitors to each resident 

Average length of stay (days) for visitors to medical residents 

Daily expenditures in the state by each visitor to residents 

Average number of visitors per physician 

Average length of stay (days) for visitors to physician 

employees 

Daily expenditures in the state by each visitor to physician 

employees 

Number of visits to hospital independent contractor 

physicians 

Average length of stay (days) for visitors to physician independent 

contractors 

Daily expenditures in the state by each visitor to independent 

contractor physicians 

Proportion of medical school enrollees from in the state 

Proportion of students living in medical-hospital housing 

Average non-housing expenditures made in the state by 

medical students 

Proportion of students living off-campus 

Average cost of off-campus rent 

Proportion of medical residents renting housing in the state 

Average expenditure by a medical resident for rental housing 

Proportion of medical residents residing in the state 

Average income of a medical resident allocable to the 

medical school/hospital 

Average expenditures in the state by each medical resident 


State business volume 

Sales and gross receipt taxes received by the state 

Individual income taxes received by the state 

Corporate net income taxes received by the state 

Other taxes received by the state 























U.S. Bureau of Economic Analysis 

U.S. Census Data 




26 

*Tripp Umbach’s national averages are derived from surveys conducted with faculty at medical colleges and teaching 

hospitals. Some of the AAMC data were from the previous study and appropriate increases were applied for the 2011 

research. 




2012 

Appendix C: Publicly Funded Research Tables 

Total State Business Volume Impact of Publicly Funded Research Conducted at AAMC- 

Member Institutions, 2009 



Direct Economic 


Indirect Economic 


California 1 $5,360,125,905 $2,061,586,886 $3,298,539,018 

Massachusetts 2 $4,666,938,397 $1,794,976,306 $2,871,962,090 

New York 3 $4,532,330,490 $1,743,204,035 $2,789,126,455 

Pennsylvania 4 $2,892,439,702 $1,112,476,808 $1,779,962,893 

Texas 5 $2,496,576,899 $960,221,884 $1,536,355,014 

North Carolina 6 $2,158,422,741 $830,162,593 $1,328,260,148 

Ohio 7 $2,045,422,508 $786,700,965 $1,258,721,543 

Maryland 8 $1,785,291,194 $686,650,459 $1,098,640,734 

Washington 9 $1,777,062,201 $683,485,462 $1,093,576,739 

Illinois 10 $1,599,980,668 $615,377,180 $984,603,488 

Missouri 11 $1,159,651,627 $446,019,857 $713,631,771 

Michigan 12 $1,115,569,675 $429,065,259 $686,504,415 

Connecticut 13 $1,044,055,338 $401,559,745 $642,495,593 

Tennessee 14 $987,400,090 $379,769,265 $607,630,824 

Minnesota 15 $944,632,296 $363,320,114 $581,312,182 

Georgia 16 $936,334,559 $360,128,677 $576,205,883 

Florida 17 $853,058,512 $328,099,428 $524,959,085 

Wisconsin 18 $801,488,179 $308,264,684 $493,223,495 

Virginia 19 $714,777,147 $274,914,287 $439,862,860 

Colorado 20 $710,221,195 $273,161,998 $437,059,197 

Oregon 21 $606,657,791 $233,329,920 $373,327,871 

Alabama 22 $597,519,638 $229,815,245 $367,704,392 

District of Columbia 23 $507,709,004 $195,272,694 $312,436,310 

Rhode Island 24 $411,336,816 $158,206,468 $253,130,348 

Iowa 25 $407,826,860 $156,856,485 $250,970,375 

All Other States $3,834,500,328 $1,474,807,818 $2,359,692,509 

U.S. Total $44,947,329,758 $17,287,434,522 $27,659,895,236 



27 




2012 

Appendix D: Impact of AAMC-Member Research 

While previous Tripp Umbach studies of AAMC members did not cover the impact of medical 

research, this report examines the impact of the publicly funded research conducted by AAMCmember 

medical schools and teaching hospitals. As noted in Science, 9 “Periodic bursts in medical 

knowledge have always been tied to the intensity of attention and support for research. The 

explosion of new medical knowledge during the past three decades, emanating largely from 

the research in the medical centers of excellence [AAMC members], has achieved prodigious 

progress in controlling many disabling and even fatal diseases.” Investment in medical centerbased 

research in the United States has brought immeasurable gains in identifying, curing, and 

preventing disease and alleviating the suffering of millions worldwide. Such research has provided 

cures and treatments for diphtheria, tetanus, pertussis, poliomyelitis, and other infectious diseases; 

significantly improved survival rates for heart disease, cancer, stroke, and diabetes; and developed 

life-saving equipment and techniques, such as the heart-lung machine, arterial substitutes for 

diseased arteries, transplantation of organs, diagnosis imaging machines, and genetic engineering 

techniques. 10 

The economic impact of medical research on the U.S. economy is an important and timely topic as 

the federal government, in the current climate of budget struggles, contemplates cutting funding to 

the National Institutes of Health (NIH) and other federal research programs. Additionally, medical 

research funding is in danger of experiencing cuts at the state budget level. In 2009, research 

funding at the national and state level received by medical schools and teaching hospitals added 

more than $44.9 billion to the U.S. economy annually, 11 and supported nearly 300,000 full-time, 

high-paying jobs—or more than one in every 500 jobs. 12 

Economic Impact of Publicly Funded Research 

Direct economic impact stems from the spending by AAMC medical school and teaching hospital 

members from federal and state funds allocated for research. In addition, these direct, first-round 

expenditures, received as income by businesses and individuals in the state, re-circulate through 

the economy in successive rounds of re-spending. The end result is a multiplied economic impact 

that is a linear result of AAMC members’ presence and their research spending patterns. 

Nationwide, the economic impact generated by state and federal funding for research consists 

of nearly $17.3 billion in direct spending, and an additional $27.6 billion in indirect economic 

impacts accruing to the economy through the re-spending by AAMC vendors, suppliers, staff, 

researchers, and visitors. 

9 DeBakey, Michael E., “Medical Centers of Excellence and Health Reform,” Science, Vol. 262 (22 October, 1993), pp. 

523-525. 

10 Ibid. 

28 

11 For this report, Tripp Umbach utilized the RIMS II multiplier for industry code 541700 on scientific research and 

development services on the national level. This multiplier was used to measure the impact on the U.S. economy and 

not on each individual state. 

12 Association of American Medical Colleges, “The Economic Impact of Medical Research on the U.S. Economy,” May 

2011. 




2012 

The Expansion of Research Employment Attributable to AAMC Members 

The research operations of AAMC members create a significant number of jobs, both directly and 

indirectly, in a multitude of industry segments within their state of operation, as well as the nation. 

A total of 299,649 jobs in the United States in 2009 were directly or indirectly attributable to 

AAMC-member research derived from federal and state sources. 

While reviewing the total employment impact, it is important to note that this is more than merely 

the number of individuals engaged in the support of research efforts, such as faculty, postdoctoral 

students, graduate students, residents and fellows, and technical and administrative support staff 

who are paid directly through the research funding of AAMC members. These mostly high-skilled 

jobs are significant to the economy because of the higher wages that tend to be paid, in addition to 

the benefits provided to those who are employed in these positions. 

While the number of direct employees is significant, the true measure of the employment impact 

on the state and the nation stemming from AAMC members’ research is significantly larger. The 

operational impact generated by AAMC members as a result of their research enterprise sustains 

jobs in a wide variety of industries throughout the U.S. economy. These indirect jobs, including 

staff, physicians, researchers, students, supply purchases, capital construction projects, etc., are 

created in industries that support the research enterprise of the member institutions. Finally, the 

research operations of AAMC-member institutions generate tax revenues at the state and local 

levels. 

Appendix C includes tables listing the total economic and employment impacts generated at the 

national and state levels by state and federal funding for research in the top 24 states and the 

District of Columbia with AAMC-member medical schools and teaching hospitals. 

Just the Tip of the Iceberg 

While impressive, these economic impact and employment data are the tip of the iceberg, as 

they represent only the spending of research dollars received by medical schools and teaching 

hospitals from federal and state sources as they ripple through the U.S. economy. Not included 

in Tripp Umbach’s impact model are those economic impacts of the medical school and teaching 

hospital research missions that are more difficult to measure. The economic impact resulting from 

commercial application and cost-savings to society from medical progress is many times higher 

than operational impacts. The size of these additional downstream economic and employment 

benefits demands further study and more accurate and ongoing quantification. Previous studies by 

Tripp Umbach and others suggest that these additional measures (outputs) may be as high as seven 

times greater than operational impacts (inputs). 13 Currently, we are unable to measure the evidence 

of programs and services that lead to measurable societal cost-savings as a result of discovery and 

bringing research to market. It is also important to note that these impacts are in addition to the 

operational impacts described in the initial sections of this report. 

29 

13 Cost Savings Resulting from NIH Research Support, NIH Publication No. 93. Silverstein, H.H. Garrison and S.J. 

Heinig, 1995. 




2012 

At the time of publication, it is not possible to fully quantify the total cost savings as a result of 

research discovery and bringing research to market. However, the narrative below seeks to highlight 

a few examples of how research is transforming modern health care and having an impact on the 

bottom-line, while at the same time improving the health of the nation’s citizens. 

Economic Impact of Medical Advances and Health Care Cost-Savings 

These research-led advances in medicine have a positive impact not only on human health and 

quality of life; they also have substantial economic advantages. A historical study 14 conducted 

by the Centers for Disease Control and Prevention estimates that the polio vaccine averted $30 

billion per year in treatment costs for the disease. Further, were it not for the tuberculosis vaccine, 

the American health care system would continue to incur the costs of long-term care for 250,000 

patients, without improving their health. Other such cost-savings include an estimated $145 

billion of savings in hospitalization costs in less than 25 years as a result of the discovery of lithium 

treatment for manic depression; $400 million to $870 million annually in savings as a result of 

potassium citrate treatment for the prevention of kidney stone recurrence; and $350 million to 

$450 million annually in savings as a result of a new vaccine developed to prevent haemophilus 

influenzae Type B disease, the leading cause of bacterial meningitis in the United States (not to 

mention the number of deaths and cases of neurological damage among infants and children 

averted by this vaccine). 15 

Some critics have argued that biomedical research is expensive. However, while biomedical 

innovation often begins with relatively expensive, invasive treatments or therapies, continued 

research has often led to highly cost-effective prevention via vaccines. According to Kirschner et al., 

the typical progression of biomedical innovation is such that “an incurable and expensive disease is 

initially treated with invasive surgery, then by progressively effective drug therapy, and finally by an 

inexpensive cure or vaccine. It would have been a mistake to freeze the process of discovery at an 

expensive intermediate stage by not investing in the next discovery.” 16 

Addressing this growing burden of rising health expenditures continues to be a major policy 

priority. Health expenditures in the United States approached $2.6 trillion in 2010, more than 10 

times the $256 billion spent in 1980. 17 Chronic disease is the main driver of mortality in the United 

States, and the costs to the U.S. economy both directly and indirectly are staggering. According to a 

study completed by the NIH, 18 the economic costs of illness in the United States are approximately 

$3 trillion annually, representing 31 percent of the nation’s GDP. This includes “direct” costs of 

public and private health care spending of $1.3 trillion, and “indirect” illness costs from reduced 

14 Kirschner, Marc W., Marincola, Elizabeth, and Teisberg, Elizabeth Olmstead, “The Role of Biomedical Research in 

Health Care Reform,” Science, October 7, 1994. 

15 U.S. Congressional Record – House, H5268. Appropriations Committee, Labor, Health and Human Services, 

Education, and Related Agencies Subcommittee; Rep. John Porter (R-IL). June 28, 1994. 

16 Kirschner, Marc W., op. cit. 

30 

17 U.S. Health Care Costs Background Brief. www.http://www.kaiseredu.org/en/Issue-Modules/US-Health-Care-Costs/ 

Background-Brief.aspx. 

18 The Benefits of Medical Research and the Role of the NIH. Office of the Chairman, Connie Mack http://jec.senate. 

gov. May 2000. 




2012 

ability to work and premature death of $1.7 trillion. 19 The importance of advancing the science of 

medicine through research cannot be understated. In addition to reducing the direct costs of care, 

medical advances cut illness costs by reducing lost economic output from disability and premature 

death. Through these medical advances, the United States has made considerable gains in health 

and longevity. A major driver behind this progress has been medical research. 

By extending the life and improving the health of the patient, medical research generates value, 

while simultaneously lowering the economic costs of illness (both directly and indirectly). U.S. 

citizens are living almost 30 years longer than they did in 1900. These gains in longevity have 

enhanced the lives of individuals and families, and have added an estimated $3.2 trillion annually 

to the U.S. economy since 1970. Moreover, people are staying active longer, which helps to improve 

overall health. The proportion of older people with chronic disabilities has dropped by nearly onethird 

in the last 25 years. 20 

Major health advances achieved through research have had an impact on the lives of many patients 

suffering from chronic diseases. Medical advances through research have reduced the prevalence of 

many acute conditions and increased life expectancy. These medical advances save lives and money. 

Cancer Research Leads to Increased Longevity and Medical Cost-Savings 

U.S. cancer death rates are currently decreasing by approximately one percent annually. Each one 

percent decline in the death rate saves about $500 billion. In addition, tremendous progress treating 

childhood cancers, such as acute lymphocytic leukemia, has resulted in the five-year survival rate 

reaching 90 percent. 21 

Personalized Medical Advances 

Personalized medicine in the treatment of breast cancer allows patients to avoid unnecessary 

chemotherapy while reducing costs in the overall health care system. Previously, women diagnosed 

with breast cancer and negative lymph nodes faced a difficult decision regarding follow-up 

treatment with chemotherapy. NIH studies have shown that following a lumpectomy and radiation, 

most women are cured of the disease, but a small percentage are not; thus many women choose 

the chemotherapy route to improve their cure rate. As a result of the Human Genome Project, 

molecular testing of the breast cancer cells, using a gene-based diagnostic tool makes it possible to 

see which genes are turned on or off in an individual tumor, thereby helping women decide if they 

need chemotherapy. The pattern of gene activity allows prediction of the chance of recurrence at 

high accuracy. According to the NIH, this genomic test will be utilized by approximately 50,000 

women annually and a large percentage will be found not to need chemotherapy. As a result of 

this medical advancement, women will avoid unnecessary chemotherapy, and the U.S. health care 

system will be spared $100 million in costs. 22 

19 Ibid. 

31 

20 Cost Savings Resulting from NIH Research Support, NIH Publication No. 93. Silverstein, H.H. Garrison and S.J. 

Heinig, 1995. 

21 http://www.nih.gov/about/impact/health.htm. 

22 Examples of NIH Research Advances and Economic Benefits: Advances Related to Genomics. October 21, 2011. 

http://www.nih.gov/about/director/10212011_advances.pdf. 




2012 

Advances in Treating Cardiovascular Disease as a Result of Research Saves Lives 

Advances against the biggest killer of Americans, cardiovascular disease, further illustrates the 

benefits of medical research. The death rate from cardiovascular disease and stroke has fallen by 

more than 60 percent in the last 50 years. In part, the decline is the result of advances in medical 

technology. 23 

Statins are enormously effective drugs that, coupled with a decrease in cigarette smoking, have been 

responsible for a huge decrease in the incidence of cardiac death, especially in young men. Statins 

have been effective at lowering mortality since 1994. Statins have proven to be a cost-effective 

medication in the treatment of cardiovascular disease. The availability of generic medication has 

reduced the cost of statins to consumers, allowing more affordable access to treatment. Findings 

of a study conducted by Harvard University show that the cost of a Quality-Adjusted Life Year 

(QALY) 24 for a 55-year-old man with a 5 percent 10-year risk of a heart attack was nearly 

$170,000. 25 The cost to save lives with specific statins is quite modest in many instances, especially 

over the longer time periods. For example, it cost only $6,600 dollars for each QALY for a 55 yearold 

man at a 30 percent risk for a vascular event over a 10-year period. As a result of statins, 

positive health outcomes are achieved at a reasonable cost. 26 

Research and medical advances are key to containing medical costs and improving the quality of 

life for patients. Continuing to invest in research and quantifying the impact of advances is critical 

to demonstrating the value of research. It is important to note that while the studies above serve 

to highlight the financial benefits of medical research, the detailed measurement of the economic 

impact of medical research requires specialized research tools and long-term temporal studies that 

are significantly beyond the scope of the research performed here. 

23 Statins Remain Cost-Effective, Not Cost Saving. November 26, 2011. http://managinghealth carecosts.blogspot. 

com/2011/11/statins-remain-cost-effective-not-cost.html. 

32 

24 The quality-adjusted life year (QALY) is a measure of disease burden, including both the quality and the quantity of 

life lived. It is used in assessing the value for money of a medical intervention. The QALY model requires utility independent, 

risk neutral, and constant proportional tradeoff behavior. The QALY is based on the number of years of life 

that would be added by the intervention. Each year in perfect health is assigned the value of 1.0 down to a value of 0.0 

for death. If the extra years would not be lived in full health, for example if the patient would lose a limb, or be blind 

or have to use a wheelchair, then the extra life-years are given a value between 0 and 1 to account for this. 

25 Statins Remain Cost-Effective, Not Cost Saving. November 26, 2011. http://managinghealth carecosts.blogspot. 

com/2011/11/statins-remain-cost-effective-not-cost.html. 

26 Ibid. 




2012 

AAMC Members’ Total Research Employment Impact in FTEs, 2009 

States Rank Total Employment Impact 

California 1 35,734 

Massachusetts 2 31,113 

New York 3 30,216 

Pennsylvania 4 19,283 

Texas 5 16,644 

North Carolina 6 14,389 

Ohio 7 13,636 

Maryland 8 11,902 

Washington 9 11,847 

Illinois 10 10,667 

Missouri 11 7,731 

Michigan 12 7,437 

Connecticut 13 6,960 

Tennessee 14 6,583 

Minnesota 15 6,298 

Georgia 16 6,242 

Florida 17 5,687 

Wisconsin 18 5,343 

Virginia 19 4,765 

Colorado 20 4,735 

Oregon 21 4,044 

Alabama 22 3,983 

District of Columbia 23 3,385 

Rhode Island 24 2,742 

Iowa 25 2,719 

All Other States 25,563 

U.S. Total 299,648 



33 


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